FTC Investigating US Formula Shortages, WSJ Reports

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CNN
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The Federal Trade Commission has launched an investigation into prolonged formula shortages in the United States that left store shelves empty of the essential product for several months, seeking to find out whether formula manufacturers colluded to bid on state contracts, The Wall Street Journal reported Wednesday. .

The report, citing documents posted on the agency’s website, says it is investigating whether Abbott Laboratories and other formula makers have “engaged in collusion or coordination with any other market participants regarding calls tenders” for government contracts.

Additionally, the FTC is investigating whether the company’s coordination affected sales more broadly, outside of the Women’s, Infant, and Children’s Formula (WIC) supply program, according to the report.

Abbott said in an email to CNN that the company was cooperating with FTC requests.

The company also pointed to its earlier March 16 response to the FTC in which the company stated, “Abbott is not aware of any factual basis to support the WIC-related investigation, and staff have not identified any reason to believe that Abbott or any of its competitors have coordinated or colluded with respect to any WIC contract. Abbott nonetheless agreed to respond to the CID, despite the significant burden and cost to the company, to reassure the FTC that the company’s bids for WIC contracts are free from coordination or collusion.

Perrigo said he was not buying the WIC rights as part of the acquisition of the Gateway facility and the Good Start formula brand from Nestlé in 2022. As such, he said the WIC rights remained with Nestlé. “Perrigo does not participate in the WIC and therefore any FTC investigation of this matter would not implicate Perrigo,” the company said in a statement emailed to CNN.

A Nestlé spokesperson confirmed to CNN that the company received a request for a civil investigation related to the WIC contract bidding process and responded to the FTC. The company said it continues to fulfill our existing WIC contracts to ensure uninterrupted supply.

Reckitt Benckiser did not immediately respond to CNN’s requests for comment. The FTC declined to comment.

The baby formula shortage came to a head in July 2022, when more than 20% of all infant products – including more than 30% of powdered formula – were missing from store shelves following a major recall. of several infant products by a major producer.

In February 2023, about a third of families with a baby under the age of one said they struggled to get supplies, according to market research firm IRI. More importantly, more than half said they had less than a week’s supply on hand.

Acute shortages eased a year later, but the crisis has caused strong emotion among families and caregivers.

Last year, the FTC began probing the industry on a wide range of topics, including potential fraud, deception, or scams when people tried to buy formula during shortages. The agency also investigated potential price gouging by online infant formula sellers.

The regulator also probed the problems faced by retailers in sourcing infant formula. Specifically, the FTC sought information on whether small retailers and independent retailers had more difficulty accessing limited supplies of infant formula than large retail chains.

More generally, the FTC also investigated the infant formula industry, the pattern of mergers and acquisitions between product manufacturers and supply chain challenges and whether there are any regulatory barriers that have prevented imports of infant formula brands in the US infant formula market.